This is just a post for me to share some of my ideas that I am reading about for my rental properties. The current book that I am reading is how to rent and flip properties to turn into a millionaire. It is fairly dated, but some of the ideas are good ones. The basic premise is this:
- get a mortgage on a property (with 25% down)
- put a small amount in of your own money each month for minor renovations (painting, new faucets, etc.)
- rent the property out
- after two years, sell your property for more than you paid for it and then use the new equity to repeat the process
A few interesting things come out of this. Number one is that you only own one (extra) property at a time. This is different from my other ideas of renting out several properties. He also says that you should pay down the principal relatively quickly, because that equity will turn into a more expensive property to purchase in the future.
He has lots of good ideas about renting out properties, but the major ones are that it is easier to rent your property out if the price is less than average in your area, that you should be looking at demographics and purchasing property in those areas (the Walmart rule...if Walmart is building stores in a community they are growing!).
Finally, the price that you set should be equal to less than one quarter of the average person's monthly salary. The idea behind this is if a person makes say $2000 per month, then paying $500 for rent doesn't seem too expensive to pay. I personally believe that it should probably be a higher ratio (especially for homes to rent or something other than a single room) but that is the ratio that he discussed. As I continue the book (whose title and author I forget at the moment) I will post any other interesting ideas I read about.